Buying a share of freehold/extending lease

cait_2

Just to let you know, I have spoken to both LEASE and to my solicitor and they have confirmed what you told me. The leasehold of his flat does not include either the roof space or the outside area he has converted to a roof terrace. They've advised me to write to him directly and tell him that he needs to apply to me to change the lease to include these areas and pay the appropriate premium (market value) for them. They suggested doing this on an informal basis to begin with to keep things amicable and, if that doesn't get anywhere, to proceed with a solicitor's letter.

I've now done this and am waiting for his reply. I'll let you know what he has to say. Thanks again for your advice - if you hadn't suggested to me that things were not quite right, I might not have tried to take any action.

Doozergirl

:dance:

It's not good news, but it is. I'm so glad you're on the right track! And there you were being manipulated into transferring him half of the freehold for nothing

I'm so interested to hear what happens with this. I can't believe he calls himself a property developer and makes such an incredibly basic, basic error.

You must find out what the market value is! Don't let him tell you what he thinks it is, for goodness sake

itsgototstop

cait wrote: »

I am interested in this thread as I am the opposite of the original poster. I own the whole freehold of a two flat converted building. The lease is currently split between me and the leaseholder with 2/3s mine and 1/3 his. I have allowed my leaseholder to develop his 1 bedroom flat by extending into the loft and adding a roof terrace which has added considerable value to his property. We didn't make any formal agreements but now he wants to split the freehold 50/50 without paying me any money as he says the general repairs he has made whilst undertaking his development are equivalent to the value of buying the freehold from me which he hasn't charged me for.

What rights do I have in this situation? Am I still entitled to charge him for buying the freehold? What is the value of 50% freehold in a now 4 storey Victorian terrace with a 99 year lease? And does the loft space belong to the freeholder? I have allowed him to incorporate this into his flat without charge which has added nearly £100,000 in value to his flat.

I would really appreciate some advice - although I am a freeholder I am totally unaware of my rights/ responsibilities and my leaseholder is a property developer.

Many thanks.

Methinks you are in for a windfall thanks to Doozergirl:beer:

He must be rash to convert without freeholder permission, did he get planning do you think?

NickF_2

Hi, My father in law owns the ground floor flat in a converted house and also the freehold for the entire house. My girlfriend owns the top floor flat and her brother the middle flat. Both my partners and her brothers flats have leases with around 120 years remaining.

My girlfriend recently asked her father for a share of the freehold and he agreed on one condition - that giving up the full freehold for each of the three flats to have to any equal 1/3 share each that his ground floor flat would not loose any market value as a result.

I tried to inform my partner that no loss of value would arise as a result of sharing the freehold but would appreciate it if someone could confirm or deny my understanding.. Please help

Doozergirl

No loss of value will arise as a result of sharing the freehold Not for a few decades yet, anyhow.

With leases of that length, the freehold as an investment is fairly worthless. Your average person will not understand the potential benefits of owning the freehold to the entire building and many people will see it as a problem unless it is explained to them.

The flipside of it not affecting the value of the father's flat is that it doesn't really affect the value of your girlfriends flat either! I'm not entirely sure why she'd want to do it, especially when you consider the legal costs of splitting the bottom flat from the freehold (if it isn't already) and the subsequent costs of setting up a company to own the freehold (which has to happen - you don't just get a third of the freehold, it has to be an entirity, so you own a share of the company that owns the freehold).

It's family too so I guess she's not trying to escape a tyranical freeholder and extortionate service charges

Richard_Webster

No loss of value will arise as a result of sharing the freehold Not for a few decades yet, anyhow.

With leases of that length, the freehold as an investment is fairly worthless. Your average person will not understand the potential benefits of owning the freehold to the entire building and many people will see it as a problem unless it is explained to them.

The flipside of it not affecting the value of the father's flat is that it doesn't really affect the value of your girlfriends flat either! I'm not entirely sure why she'd want to do it, especially when you consider the legal costs of splitting the bottom flat from the freehold (if it isn't already) and the subsequent costs of setting up a company to own the freehold (which has to happen - you don't just get a third of the freehold, it has to be an entirity, so you own a share of the company that owns the freehold).

Exactly. Some people just need a dose of market reality from people like Doozergirl!

cait_2

Hi Doozergirl

I've just had an informal meeting with my leaseholder and he's agreed to the fact that the lease needs changing and that a premium should be paid. However, he's suggested that the formula for working this out is that he owes me 5% of the increase in value to his flat after deducting his costs - his opinion is that this is probably about £1,000! My understanding was that he should pay the full market value of the additional space. We've agreed to both get estate agents in to provide valuations but can you advise me re the 5% equation please? I really don't trust him anymore and would like to be armed with as many facts as possible.

Thanks for your help!

Doozergirl

He's talking rubbish! The facts that you need;

The loft is YOURS, not his! Belongs to you, not him!

The flat is currently unmortgageable and virtually unsaleable - there has been, and will be, no increase in value until he has that loft in his lease!

His pants are well and truly down. He can't make a penny on the flat until he gets the lease. You have him ransom. It is your loft. He is in breach of his lease and if you wanted to push it, I'm sure you could force him to put it back the way it was!

You need not an Estate Agent but a proper surveyor who can value a lease for you. I'd get in contact with RICS and see if perhaps they could put you in contact with someone who deals in leases who can give you a valuation and help you through this! You really need someone to hold your hand and although I will help you and give you as much moral support as I can, I don't have any qualifications!

My gut says that you get 50% of the increase in the value of the property after all the structural elements are in place, which in my head should sensibly work out at around a third of the difference between the value of his flat then, and the value of the flat now. 5% is complete tosh. When you create a lease for a brand new flat, you, as freeholder, can actually sell that flat for the same value as you could if it were freehold itself because the length of the lease means it holds lifetime value to people. Now you are selling off, effectively, a brand new lease on the loft, it holds a lot of value. Not as much as if you converted it yourself, but a great deal nonetheless

Your little friend upstairs has to pay for EVERYTHING. That means valuations and legal fees. You shouldn't really have to put your hand in your pocket at all. If you have to pay out, then send him an invoice first and you don't move forward an inch until he pays up.

He is a total liar and I suspect he is just flying by the seat of his pants. Let me at him!

EDIT: List of specialist surveyors from the Leasehold Advisory Service
http://www.lease-advice.org.uk/surframe.htm

cait_2

Ok, thank you again for the massive reassurance, Doozergirl. I've spoken to my solicitor about the situation and he has written to my leaseholder. I've also spoken to LEASE again and they were very clear about the situation too and were even talking in terms of lease forfeiture. Amazingly enough, I came home last night to find an unknown couple on my doorstep who introduced themselves as my new neighbours - apparently moving in next week! I can't believe this guy has the nerve to continue letting the flat illegally.

Anyway, I have invited him round today to talk to him and I will lay everything straight with him about what I expect to happen now and then I'll see where he goes from there. I totally agree with you though - he is such a liar!

Will let you know what happens next but many, many thanks for your fantastic help, support and advice.

Doozergirl

Let me know what happens!

I'm glad your solicitor is writing, tbh. He needs to know that you're getting the correct advice and he needs to be taken down a peg or two!